Computer and printer maker Hewlett-Packard Co. (HPQ) said Wednesday after the markets closed that it swung to a $8.9 billion third quarter loss, hurt by a hefty goodwill impairment charge as well as restructuring and other costs.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast.
At the same time, the Palo, Alto, California-based company lowered the high end of its full year adjusted earnings outlook range.
"HP is still in the early stages of a multi-year turnaround, and we're making decent progress despite the headwinds," said Meg Whitman, HP president and chief executive officer.
HP shares are currently losing 1.09% in after hours trading after closing the day's regular trading session at $19.20, down 73 cents or 3.66%. The shares trade in a 52-week range of $17.41 to $30.00.
Third quarter revenue for HP's Personal Systems Group fell 10% to $8.6 billion. For the quarter, Notebook unit sales fell 12%, but Desktop unit sales were down 6%. In August, HP announced strategic alternatives for this business, but later decided to keep it following a review.
Last month, two industry research firms International Data Corp. (IDC) and Gartner Inc. (IT) said that global PC shipments in the second quarter of 2012 were down 0.1% from last year, as the popularity of latest smartphones and media tablets continued to hit PC demand.
HP continues to be the world's largest PC maker. It had taken the world PC lead from Dell Inc. (DELL) in 2006.
Third quarter revenue for HP's Imaging and Printing Group declined 3% from a year earlier to $6.0 billion.
The company said in March that it would merge its Imaging and Printing Group and its Personal Systems Group to create the Printing and Personal Systems Group, to be led by Todd Bradley.
Revenue for the company's Enterprise Storage, Servers and Networking group slipped 4% to $5.1 billion in the third quarter. Services revenue for the quarter declined 3% to $8.8 billion.
HP's software revenue for the third quarter surged 18% year-over-year to $973 million, boosted by last year's acquisition of U.K. Software firm Autonomy Corp.
Meg Whitman, who was appointed as HP CEO in September 2011, has been making sweeping organizational changes for the past nearly one year in a bid to make HP a leaner and meaner company. In May, HP said that it expected to eliminate about 27,000 employees, or 8% of its workforce as of October 31, 2011, by the end of fiscal year 2014 as part of a restructuring that is expected to generate annualized savings of $3.0 billion to $3.5 billion, majority of which will be reinvested back into the company.
For the third quarter ended July 31, 2012, HP reported a net loss of $8.9 billion or $4.49 per share, compared to net income of $1.9 billion or $0.93 per share for the year-ago quarter.
The latest quarter results include after-tax costs of $10.8 billion or $5.49 per share, related to the amortization and impairment of purchased intangible assets, the impairment of goodwill, restructuring charges, acquisition-related charges and charges relating to the wind-down of certain retail publishing business activities, including the previously announced charges related to the impairment of goodwill within HP's Services segment, the restructuring program announced in May, and the impairment of the purchased intangible asset associated with the "Compaq" trade name.
Excluding items, adjusted net income for the third quarter fell to $2.0 billion or $1.00 per share from $2.3 billion or $1.10 per share in the prior year quarter. The latest quarter adjusted earnings per share came in line with the company's preannouncement made on August 8.
On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.98 per share for the third quarter. Analysts' estimates typically exclude special items.
Net revenue for the third quarter fell 5% to $29.67 billion from $31.19 billion in the same quarter last year. Twenty-seven analysts had a consensus revenue estimate of $30.10 billion for the third quarter.
During the third quarter, HP repurchased about 16.5 million shares of its common stock for $365 million and ended the quarter with $9.9 billion in gross cash.
For the fiscal year 2012, the company now a net loss of $2.23 to $2.25 per share and adjusted earnings of $4.05 to $4.07 per share. Previously, the company forecast earnings of $2.25 to $2.30 per share and adjusted earnings of $4.05 to $4.10 per share. Analysts currently expect the company to earn $4.07 per share for the fiscal year 2012.
Rival Dell on Tuesday reported a 18% drop in second quarter profit, as revenue declined and margins deteriorated amid slow consumer demand. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast. At the same time, the company gave a downbeat revenue guidance for the third quarter and cut its full year earnings outlook.
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